The following transactions apply to Walnut Enterprises for Year 1, its first year of operations: Received $43,000 cash from the issue of a short-term note with a 5 percent interest rate and a one-year maturity. The note was made on April 1, Year 1. Received $117,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent. Paid $73,000 cash for other operating expenses during the year. Paid the sales tax due on $97,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2. Recognized the accrued interest at December 31, Year 1. The following transactions apply to Walnut Enterprises for Year 2: Paid the balance of the sales tax due for Year 1. Received $142,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent. Repaid the principal of the note and applicable interest on April 1, Year 2. Paid $86,000 of other operating expenses during the year. Paid the sales tax due on $117,000 of the service revenue. The sales tax on the balance of the revenue is not due until Year 3. Required post the transaction to T-accounts
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
The following transactions apply to Walnut Enterprises for Year 1, its first year of operations:
Received $43,000 cash from the issue of a short-term note with a 5 percent interest rate and a one-year maturity. The note was made on April 1, Year 1.
Received $117,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.
Paid $73,000 cash for other operating expenses during the year.
Paid the sales tax due on $97,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until Year 2.
Recognized the accrued interest at December 31, Year 1.
The following transactions apply to Walnut Enterprises for Year 2:
Paid the balance of the sales tax due for Year 1.
Received $142,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.
Repaid the principal of the note and applicable interest on April 1, Year 2.
Paid $86,000 of other operating expenses during the year.
Paid the sales tax due on $117,000 of the service revenue. The sales tax on the balance of the revenue is not due until Year 3.
Required
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
